When credit card bills, personal loans or medical debt become difficult to manage, Chapter 7 bankruptcy may offer a way to address overwhelming debt. For young families juggling childcare costs, a mortgage or rent and everyday expenses, the idea of filing can feel stressful and uncertain.
Knowing what to expect before, during and after filing for Chapter 7 can make the bankruptcy process easier to understand.
What happens before and after filing
Those considering Chapter 7 can benefit from knowing what to expect throughout the bankruptcy process. From preparing to file to receiving a discharge, each stage has specific requirements and deadlines. The process includes:
- Reviewing finances: Before filing, individuals will need to provide information about their income, expenses, debts and assets. They must also complete credit counseling from an approved provider before filing.
- Filing for Chapter 7: Individuals will file bankruptcy forms with the U.S. Bankruptcy Court. Filing generally triggers an automatic stay, which can stop many collection actions, including creditor calls, lawsuits and wage garnishments.
- Attending the meeting of creditors: A bankruptcy trustee will review the case and conduct a meeting of creditors. The individual will answer questions about their finances, debts and property. Creditors may also attend and ask questions.
- Completing required courses: Individuals generally must complete a financial management course after filing. They will also need to meet other requirements before receiving a discharge.
- Receiving a discharge: If the individual meets the requirements and no successful objection prevents it, the court may issue a discharge. This generally eliminates the individual’s personal responsibility for qualifying debts.
Not every debt goes away when the case ends. Student loans, most tax debts, alimony and child support and debts from fraud typically remain even after discharge. Court-ordered restitution is also non-dischargeable.
On the other hand, secured debts like a car loan work differently, since the filer can usually keep the property by continuing payments through a reaffirmation agreement or give it back to settle what’s owed.
Getting help with Chapter 7 in Oregon
Dealing with debt, especially if you’re supporting a young family, can be difficult. Learning how Chapter 7 works can help them understand what to expect and whether bankruptcy may be an option. An Oregon bankruptcy attorney can review the income, debts, assets and financial goals. They can explain the Chapter 7 process and help understand the options available for addressing the debt.
